Student Name:

ID:

BUS635.5: Managerial Finance

Due by: 07/04/2016 (Print copy at NAC770 by 11.59PM)

FSA Assignment, Spring 2016

Complete the following and write down comment/observation:
Company
INCOME STATEMENT

XYZ

Net Sales
Less: Cost of Goods Sold
Gross Profit
Less: Operating Expenses (General, Selling, and
Administrative)
Operating Income (EBIT)
Less: Interest Expense
Income before Taxes (EBT)
Less:Taxes (35%)
Net Income (Loss)

2008

2007

2006

$1,640,000
$ 800,000
$
840,000

$1,574,000
$ 725,000
$
849,000

$1,400,000
$ 600,000
$
800,000

$
$
$
$
$
$

440,000
400,000
40,000
360,000
126,000
234,000

BALANCE SHEET

430,000
419,000
38,000
381,000
133,350
247,650

$
$
$
$
$

2008

ASSETS
Current Assets:
Cash
Accounts Receivables
Inventories

$
$
$
Total Current Assets

Long-Term Assets:
Property, plant, and equipment
Less: Accumulated Depreciation
Total Long-Term Assets
Total Assets

$1,200,000
$ 280,000
$
920,000
$
1,620,000

LIABILITIES AND EQUITY

Current Liabilities:
Accounts Payable
Short Term Loans

$
$
Total Current Liabilities

Long-Term Liabilities:
Long-term Debt
Other Long-term Liabilities

$
$
Total Long-term Liabilities
Total Liabilities

$
$

Shareholders' Equity:
Common Equity
Retained Earning

$
$
Total Equity
Total Liabilities and Equity

62,000
190,000
448,000
700,000

$
$

140,000
40,000
180,000
250,000
10,000
260,000
440,000
900,000
280,000
1,180,000
1,620,000

$
$
$
$
$
$

2007
$
$
$
$

50,000
180,000
490,000
720,000

$1,000,000
$ 240,000
$
760,000
$
1,480,000

$
$
$
$
$
$
$
$
$
$
$

120,000
20,000
140,000
250,000
10,000
260,000
400,000
900,000
180,000
1,080,000
1,480,000

410,000
390,000
39,000
340,000
119,000
221,000

2006
$
$
$

60,000
150,000
300,000
510,000

$
$

950,000
220,000
730,000
1,240,000

$
$

110,000
10,000
120,000

$
$

250,000
10,000
260,000
380,000

$
$

900,000
60,000
960,000
1,340,000

$
$

$
$

$
$

Vertical Common size Analysis:

Company
INCOME STATEMENT

XYZ

2008

2007

2006

Net Sales
Less: Cost of Goods Sold
Gross Profit
Less: Operating Expenses (General, Selling, and Administrative)
Operating Income (EBIT)
Less: Interest Expense
Income before Taxes (EBT)
Less:Taxes (35%)
Net Income (Loss)

100%

100%

100%

BALANCE SHEET

2008

2007

2006

100%

100%

100%

100%

100%

100%

ASSETS
Current Assets:
Cash
Accounts Receivables
Inventories
Total Current Assets
Long-Term Assets:
Property, plant, and equipment
Less: Accumulated Depreciation
Total Long-Term Assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable
Short Term Loans
Total Current Liabilities
Long-Term Liabilities:
Long-term Debt
Other Long-term Liabilities
Total Long-term Liabilities
Total Liabilities
Shareholders' Equity:
Common Equity
Retained Earning
Total Equity
Total Liabilities and Equity

Horizontal Common size Analysis:

Company
INCOME STATEMENT

XYZ

2008

2007

Net Sales
Less: Cost of Goods Sold
Gross Profit
Less: Operating Expenses (General, Selling, and
Administrative)
Operating Income (EBIT)
Less: Interest Expense
Income before Taxes (EBT)
Less:Taxes (35%)
Net Income (Loss)

BALANCE SHEET

100%
100%
100%
100%
100%
100%
100%
100%
100%

2008

ASSETS
Current Assets:
Cash
Accounts Receivables
Inventories

2006

2007

2006

Total Current Assets

100%
100%
100%
100%

Total Long-Term Assets

Total Assets

100%
100%
100%
100%

Total Current Liabilities

100%
100%
100%

Total Long-term Liabilities

Total Liabilities

100%
100%
100%
100%

Total Equity
Total Liabilities and Equity

100%
100%
100%
100%

Long-Term Assets:
Property, plant, and equipment
Less: Accumulated Depreciation

LIABILITIES AND EQUITY

Current Liabilities:
Accounts Payable
Short Term Loans
Long-Term Liabilities:
Long-term Debt
Other Long-term Liabilities

Shareholders' Equity:
Common Equity
Retained Earning

DuPont Analysis (2008):

Return on Asset
0.038
Return on
Asset

Net Profit Margin

Total Asset Turnover

Return on
Asset

Operating Profit
Margin

Effect of
NonOperating Items

Tax
Effect

Total Asset
Turnover

Tax
Effect

Total Asset
Turnover

Tax
Effect

Total Asset
Turnover

Tax
Effect

Total Asset
Turnover

Return on Equity
0.052
Return on
Equity

Return on Asset

Financial leverage

Return on
Equity

Operating Profit
Margin

Effect of
NonOperating Items

Financial
leverage

Financial
leverage

DuPont Analysis (2007):

Return on Asset
0.046
Return on
Asset

Net Profit Margin

Total Asset Turnover

Return on
Asset

Operating Profit
Margin

Effect of
NonOperating Items

Return on Equity
0.061
Return on
Equity

Return on Asset

Financial leverage

Return on
Equity

Operating Profit
Margin

Effect of
NonOperating Items

Ratio Analysis:
Value
LIQUIDITY
Accounts
Receivable
Turnover

2008:
Net Sales
-------------------------------------Average Accounts
Receivable

A/R
Turnover in
Days

2006:

2008:
365
-------------------------------------Accounts Receivable
Turnover

2006:

2008:
Inventory
Turnover

Cost of Goods Sold

--------------------------------Average Inventories

Inventory
Turnover in
Days

2006:

2008:
365
-------------------------------------Inventory Turnover

2006:

2008:
Operating
Cycle

A/R Turnover in Days +

Inventory Turnover in Days

2006:

2008:
Working
Capital

Total Current Assets - Total

Current Liabilities

2006:

2008:
Current
Ratio

Total Current Assets

---------------------------------Total Current Liabilities

SOLVENCY
Times
Interest
Earned

2006:

2008:
Income before Taxes +
Interest Expense
-------------------------------------Interest Expense

2006:

2008:
Debt Ratio

Total Liabilities
-------------------------------Total Assets

2006:

2008:
Debt/Equity

Total Liabilities
-----------------------Total Equity

2006:

Interpretation/observation/comment on trend/change

PROFITABILITY
2008:
Net Profit
Margin

N.I.
--------------------------------Net Sales

2006:

2008:
Total Asset
Turnover

Net Sales
--------------------------------Average Total Assets

2006:

2008:
Return on

N.I.
----------------------------Average Total Assets

Assets

Operating

2006:

2008:
Operating Income
------------------------Net Sales

Income
Margin

2006:

2008:
Return on
Total Equity

N.I.
-------------------------------------Average Total Equity

2006:

2008:
Gross Profit

Gross Profit
-------------------Net Sales

Margin

2006:

MISC. ANALYSIS
Degree of
Financial
Leverage

2008:

Income before Taxes +

Interest Expense
-------------------------------------Income before Taxes

2006:

Simple Proforma Statement and analysis:

Assumptions (hypothetical, NOT based on historical record analysis):
Sales
COGS
SG&A
Current Assets
Net PPE
Current Liabilities
Interest
Long term interest
Retention rate

8%
50%
25%
40%
60%
10%
stable
stable
50%

growth
of sales
of sales
of sales
of sales
growth

of net income

Company:
INCOME STATEMENT

XYZ
2008

Net Sales
Less: Cost of Goods Sold
Gross Profit
Less: Operating Expenses (General, Selling, and Administrative)
Operating Income (EBIT)
Less: Interest Expense
Other Income (Expenses)
Income before Taxes (EBT)
Less: Taxes (35%)

$1,640,000
$ 800,000
$
840,000
$ 440,000
$
400,000
$
40,000
$
$
360,000
$ 126,000

Net Income (Loss)

234,000

BALANCE SHEET
ASSETS
Current Assets:

2008

Total Current Assets

Long-Term Assets:
Net Property, plant, and equipment

2009 (estimated)

261,820

2009 (estimated)

700,000
$

920,000

Total Assets

1,620,000

Total Current Liabilities

180,000

1,771,200

LIABILITIES AND EQUITY

Current Liabilities:

Difference =

Long-Term Liabilities:
Long-term Debt
Other Long-term Liabilities
Total Long-term Liabilities
Total Liabilities

250,000
10,000
260,000
440,000

$
$

900,000
280,000
1,180,000
1,620,000

$
$

Shareholders' Equity:
Common Equity
Retained Earning
Total Equity
Total Liabilities and Equity

$
$

$
$

How we can reconcile? Write

in brief below

10,000

397,000
1,755,000